Media Releases

The world wants our hops.

30/Jul/2018

Monday 30 July 2018For immediate release

MyFarm has launched a $17.64 million investment into what will become New Zealand's largest hop garden.

The opportunity to invest in Tapawera Hop Garden Limited Partnership includes the purchase of a 96-hectare property and the lease of a second 50-hectare property which will be developed into a 116 canopy (effective) hectare garden. Half of the garden will be planted this spring alongside other development such as building hop picking and drying facilities and worker accommodation.

The Tapawera Hop Garden is expected to reach full production in the Financial Year ending June 2022 and is projected to generate an average annual cash return of 15% p.a by 2023.

The offer includes a $3 million stake in new hop exporter Hop Revolution Ltd, which will manage the garden and market the hops offshore. Hop Revolution Ltd in 2017 secured access to the plant variety rights for some of New Zealand's most sought - after aroma hop varieties. Chairman, John Loughlin says the company believes it can add considerable value to the way New Zealand hops are marketed internationally.

"Like Zespri and Rockit apples we're aiming to create brand value for growers by contracting directly with select craft breweries to supply them with commercial quantities of high quality hops of the varieties they're looking for."

Global craft beer sales are projected to grow by a compound 19.9% p.a. and are forecast to reach US$500 billion by 2025. John Loughlin says New Zealand spray-free aroma hops are highly sought after by international brewers for the unique flavours and aromas they impart in beer.

MyFarm CEO Andrew Watters says he's been pleased at the level of interest from New Zealand investors prior to the release, which is MyFarm's first hop garden offer.

"We have had calls from investors asking when we are opening this offer because they don't want to miss out. I think this is related to hops being quite a closed sector until now and people understanding the significant growth potential as a result of drinkers switching to craft beer."

The total productive area of hops gardens in NZ today is approximately 600 canopy hectares. All but one of these growers supply the grower co-operative, New Zealand Hops Limited ("NZ Hops Ltd"), and the average size of their holdings is estimated at 23 Cha.

AN INSIGHT INTO NZ AROMA HOPSAnalysis by Con Williams, MyFarm Head of Investment Research

Craft beer styles are taking market share from traditional lagers and have strong growth prospects. Beer consumption has plateaued in many developed markets driven by demographic changes, competition from new styles of alcohol beverages, higher taxes, tighter drinking regulations, health concerns and the premiumisation of the category. But the numbers show globally many drinkers are opting for a 'less is more approach' trading up to craft beer and the different premium styles it encompasses. This due to their on-trend features of offering radically different flavours and taste experiences that can be matched with a variety of occasions and consumer preferences.

Hops are a key ingredient in crafty beer and more specifically the aroma varietals. While New Zealand is only a small supplier, accounting for less than 1% of global hop production, our product is known for its 'terroir' – the characteristic taste and flavour imparted by the environment in which it is produced. Similar to New Zealand's unique Marlborough Sauvignon Blanc many of our hop varietals, such as Nelson Sauvin and Riwaka, attract the same recognition and price premiums. In many ways this Tapawera opportunity bears similar hallmarks to other export success stories, such as SunGold, or Rockit Apples, which are based around well-functioning vertically integrated supply chains, product uniqueness with trademarked intellectual property, targeting premium market segments and the creation of strong brands. This blue print is fuelling development of many horticultural crops in New Zealand.